CHECK THIS OUT JUST OUT 10/19/2009 STARTIN OVER THIS COULD BE HUGE!!!!!!!!!!.
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Energy & the Environment
Friday, October 16, 2009
Particle Drilling back in one pieceBit developer emerges from brief bankruptcy with private financing
Houston Business Journal - by Greg Barr
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Michael Stravato/HBJ
Jim Terry of Particle Drilling Technologies: ‘Through this difficult period we still managed to prototype some new drill bit sizes.’
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A Houston company engaged over the past four years in development of a new drilling technology has emerged from bankruptcy with fresh financial backing and a commitment from an energy industry giant intact.
Particle Drilling Technologies Inc., which had been publicly traded, filed for Chapter 11 bankruptcy protection in May and laid off most employees as the company’s private and public funding options hit a dry hole due to the squeeze on financial and credit markets tied to the global recession.
Five months later, following completion of lengthy proceedings through U.S. Bankruptcy Court in Houston, the company is back in business as a privately held entity, financed by Edward Heil, a Chicago-area businessman and investor.
The new holding company is known as PDTI Holdings LLC, but continues to do business as Particle Drilling.
Company officials say Particle Drilling is back on track with research and development efforts to design new applications for the company’s hydraulic-energy based drill-bit technology, created to cut through particularly hard or abrasive rock formations. The system is designed to drill into the rock at an estimated rate of two to four times faster than conventional equipment.
In pursuit of developing the system, Particle Drilling has posted cumulative losses of about $45 million since the company’s formation in early 2003. A reverse merger transaction in 2005 took the company public.
Particle Drilling CEO Jim Terry says he filed the bankruptcy papers as a last resort after other capital-raising options were exhausted. He says he made his decision after LC Capital Master Fund Ltd., a New York hedge fund, forwarded only $60,000 of a promised $400,000.
Says Terry: “That put us behind the eight ball, so we had to furlough everybody.”
MAJOR COUP
Regulatory filings show Particle Drilling began looking for strategic alternatives a year ago just as credit markets became frozen solid.
Particle Drilling experienced some encouraging results, but also ran into unexpected problems with a commercial field test for Canadian natural gas giant EnCana Corp. that sent the Houston company’s technology back to the drawing board.
Filings also show the company scored a major coup last December by inking a developmental deal with Shell Oil Co. to design, test and produce four variable-sized drill bits through 2010, and received a $200,000 payment from Shell in March.
Declining to confirm the deal with Shell, Terry says only that Particle Drilling has an agreement with a “major oil company,” and will continue testing drill bits for that company in November at a new site in Wyoming, after completing initial testing earlier this year in New Mexico.
Kelly op de Weegh, a Shell spokesperson, says the company cannot comment on vendor agreements “for competitive reasons.”
Terry does confirm that Particle Drilling is in discussions with Petrobras, the Brazilian multinational oil company, to potentially test the drill bits in an offshore site and at an onshore site in the Amazon jungle. He also hopes to resume talks with EnCana regarding the company’s holdings in the Haynesville natural gas shale play in Louisiana.
Regulatory documents also show that Particle Drilling was able to fight off a court challenge from ProDril Services Inc., which sought to continue a prior royalty payment agreement related to the drilling technology with the new private entity.
Bankruptcy court filings show the company is spending approximately $300,000 a month for continuing operations.
Particle Drilling’s stock still officially trades at less than a penny a share on the Pink Sheets after being delisted from the NASDAQ Stock Exchange LLC, but the company did file paperwork with federal regulators in September to cease requirements for continued public filings.
Terry points to the company’s accomplishments during the financial trials and tribulations.
“Through this difficult period we still managed to prototype some new drill bit sizes,” Terry says.
He notes that drill bit sizes being tested by the company range from 6 inches in diameter to 9 7/8 inches.
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